What portion of global investments is represented by foreign direct investments?

Foreign direct investments (FDI) represent a significant portion of global investments, with the figure often cited around 7%. This percentage indicates the amount of investment that crosses national borders in the form of businesses taking a controlling interest in foreign companies or establishing new operations abroad. FDI is crucial because it not only reflects the commitment of capital but also the transfer of technology, management practices, and resources, which can lead to enhanced productivity and economic growth in the host country.

The 7% figure serves as a benchmark that illustrates the scale of global investment flows as they relate to foreign direct investments compared to other types of investments, such as portfolio investments or other financial instruments. Understanding the role of FDI in the global economy is vital, as it influences job creation, income enhancement, and innovation in various regions around the world.